MidSouth Week in Review:
February 15, 2019
Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund
Feb. 19, 2019 | RedChip Companies
The S & P was up 2.5% for the week and the Dow was up 3.0%, its eighth consecutive up week. The U.S. national debt hit $22 trillion this week. Retail sales recorded their biggest drop in nine years, suggesting a slowdown in economic activity, according to Reuters. Sears rose from a 15 cent Jan. low to a $2.77 high this week after CEO Eddie Lampert announced his plans to restructure the company. The U.S. markets will be closed on Monday in observance of President’s Day.
BuzzBits
Sold At The Bottom – Mid-December mutual fund redemptions hit the highest level since October 2008. The S & P is now up 17% from its December 24 close and the small cap Russell 2000 index is up 24%.
Work – “The democracy will cease to exist when you take away from those who are willing to work and give to those who will not.” – Thomas Jefferson
Amazon – is rumored to have changed its mind about setting up a 25,000 employee campus in NYC. The city and the state have supposedly offered Amazon around $125,000 per employee in incentives and subsidies to move to the city, which is upsetting too many citizens (Yesterday Amazon announced they were cancelling their move to NYC, blaming opposition from local leaders about the incentives they were to receive, causing real estate speculators to probably take a big hit. November residential sales contracts in Queens were 135 vs. 48 last year, a 181% rise) …..Amazon’s CEO Jeff Bezos, announced last month that he is getting a divorce which may be the tipping point for the stock. Studies show that when money managers go through a separation, their returns normally underperform. Top ranked bond portfolio manager Bill Gross announced in 2016 he was divorcing. He recently announced he was retiring after four years of underperformance and a negative 4% return in 2018. Amazon has declined 3.5% since Bezos’s January 9th divorce announcement vs. a 6.5% S & P advance - Buzz
Cannabis – use is soaring. In 2006, 3 million used pot at least 300x’s a year vs. 8 million today. In the 1970s, most marijuana contained less than 2% THC vs. 20%-25% today. Pot fuels violence in psychotic people through its tendency to cause paranoia. In 2017, 7.5% of young people met the criteria for serious mental illness, double the rate in 2008. The first states to legalize recreational use of pot were CO, WA, AK and OR. Combined the four states had 450 murders in 2013 vs. 617 last year, a 37% increase – “Tell Your Children”, Alex Berenson
Cash Purchases – 12% of consumers didn’t pay with cash once in 2017. A 2018 Pew Research survey found 29% of Americans made no purchases using cash during a typical week – Wall Street Journal
Elite Canadian Hockey Players – are quite often born in the Jan-Feb period. Why? Kids born on Jan. 1 play in the same league as those born on Dec. 31. Because kids born earlier in the year are statistically larger and more physically mature, they are often identified as better athletes. This leads to extra coaching and a higher likelihood of being selected for elite hockey leagues.
Warren Buffett – is worth $100 billion+. In 2015, he paid only $1.5 million in Federal income taxes on more than $11 million of income. His salary as CEO of Berkshire is $100,000 annually. The company pays no dividends so his huge net worth came strictly from the appreciation of his Berkshire Hathaway stock – Barron’s
Denver Teachers Strike – The average Denver teacher makes $63,400 per year for 180 days of work (36 weeks) – New York Times …..The strike was settled on Thursday with the educators agreeing to a 7% to 11% pay increase - CNN
Banks – Last week BB&T and SunTrust announced they were merging to become the 6th largest U.S. bank. In 1984 there were 14,450 commercial banks. In 2009 that was down to about 7,000 and by 2018’s 3Q to 4,746. Today, 55% of the bank assets in the U.S. are controlled by just five banks – Barron’s
Baltimore – has the highest murder rate among the nation’s big cities, with 309 in 2018 vs. 289 in NYC and 261 in Detroit. Only one of four homicides were solved last year. Given these stats, the city’s top prosecutor said she would no longer bother with marijuana cases, allowing the police to devote more time to serious crime – New York Times
High-Priced Pickup Trucks – In 2003 the average-size pickup sold for $26,580 vs. $24,773 for all passenger vehicles. Today the trucks sell for $44,131 vs. $32,544 for passenger autos, a sixfold price gap increase with some even priced at $75,000+. Most of the trucks sold are U.S. made because of a 25% tariff on foreign-made trucks – Wall Street Journal
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